The Martinezes are planning to refinance their home. The outstanding balance on their original loan is $150,000. Their finance company has offered them two options:
Option A: A fixed-rate mortgage at an interest rate of 7.7%/year compounded monthly, payable over a 20-year period in 240 equal monthly installments.
Option B: A fixed-rate mortgage at an interest rate of 7.1%/year compounded monthly, payable over a 10-year period in 120 equal monthly installments. (Assume that there are no additional finance charges.)
Find the monthly payment required to amortize each of these loans over the life of the loan. Round your answers to the nearest cent.
option A: $__________
option B: $__________
How much interest would the Martinezes save if they chose the 10-year mortgage instead of the 20-year mortgage? Round your answer to the nearest cent.
$__________

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The Answer of The Martinezes are planning to refinance their home. The outstanding balance on their original loan is $150,000. Their finance company has offered them two options:
Option A: A fixed-rate mortgage at an interest rate of 7.7%/year compounded monthly, payable over a 20-year period in 240 equal monthly installments.
Option B: A fixed-rate mortgage at an interest rate of 7.1%/year compounded monthly, payable over a 10-year period in 120 equal monthly installments. (Assume that there are no additional finance charges.)
Find the monthly payment required to amortize each of these loans over the life of the loan. Round your answers to the nearest cent.
option A: $__________
option B: $__________
How much interest would the Martinezes save if they chose the 10-year mortgage instead of the 20-year mortgage? Round your answer to the nearest cent.
$__________

The Martinezes Are Planning to Refinance Their Home